Dealmaking

Dealmaking is defined as the art of crafting deals through negotiations focused on an integrative, or value-creating process, rather than through distributive bargaining, or a haggling process. Dealmaking includes the range of activities both at the bargaining table and away from it that seek to bring two or more parties together toward some common end, whether it is the sale of an asset, a vendor agreement, or a merger between corporations. The Program on Negotiation emphasizes integrative bargaining in its dealmaking literature and teaches methods and techniques from this school of thought in its executive education courses.

In corporate dealmaking, much of the action happens away from the negotiating table. Successful dealmakers understand that deal set-up and design greatly influence negotiation outcomes and successfully closing a deal. Other critical factors in successfully making deals include strategic behavior – the unwillingness of one or both sides to make a best offer – psychological factors, lack of a deadline, poorly-prepared formal documents and refusal to allow the other side to make a graceful exit, even when they’ve agreed to your demands.

Strategies for successful dealmaking include tactics such as creating more value by exploring hidden interests and adding issues that appeal to your bargaining opponent. Another tactic is recruiting a third party mediator when the dealmaking process is at an impasse. Sometimes, Harvard experts find, it pays to be the first person to make an offer, while at other times, it pays to wait.

Articles from the Program on Negotiation focus on a vast array of dealmaking strategies, and explore the latest concepts such as expanding the pie, “negotiauctions,” anchors in negotiation and bartering.

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A harmonious ending

PON Staff   •  01/14/2015   •  Filed in Dealmaking

If you’ve ever felt trapped in a long-standing relationship, you may know the frustrating feeling of watching tempting opportunities pass you by. Executives at the Lincoln Center for the Performing Arts in New York City recently experienced the relief that can come from gracefully ending a partnership that has outlived its usefulness, as described by … Read More 

The Risks of Taking Dealmaking Off the Table

Katie Shonk   •  12/24/2014   •  Filed in Dealmaking

Financial Negotiations

On December 7, the news broke that Pierre Korkie, a South African who had been held hostage in Yemen by Al Qaeda, was killed by his guards just hours before his scheduled release due to a botched U.S. attempt to free another hostage. The tragedy suggests the dangers not only of refusing to engage in … Read More 

In the NFL, Roger Goodell’s Dealmaking for Mutual Gains

Katie Shonk   •  10/15/2014   •  Filed in Dealmaking

Because an agent’s incentives are rarely, if ever, perfectly aligned with those of her principal (principal-agent theory), many business negotiators have been burned by agents who put their own interests first. Agents in many fields, for example, have a motivation to close deals quickly – rather than for the best price – and earn quick … Read More 

Dealmaking: Bank of America’s Game of Chicken

PON Staff   •  09/24/2014   •  Filed in Dealmaking

What’s the difference between an effective bluff and an ineffective one? Last year’s financial meltdown offered an example of each. In last month’s issue, we described how a bluff by then–U.S. Treasury Secretary Henry Paulson scared off potential buyers for failing investment bank Lehman Brothers in September 2008. After Paulson told Wall Street CEOs that … Read More 

To harness your power, consider a coalition

PON Staff   •  09/14/2014   •  Filed in Dealmaking

On June 27, members of the so-called Gang of Eight took to the floor of the U.S. Senate to make their final arguments for the sweeping immigration bill they had negotiated and promoted for months. After Republican senator Marco Rubio of Florida finished his remarks, the other members of his coalition flocked to him, patting … Read More 

For Bank of America, Dealmaking to Turn the Page

Katie Shonk   •  09/03/2014   •  Filed in Dealmaking

Negotiation often marks a new beginning: of a partnership, a project, or employment relationship. At other times, the goal of dealmaking is as much about reaching an ending as it is about moving forward.

That’s the attitude with which Bank of America wrapped up its settlement negotiations with the Department of Justice (DOJ) last month. For … Read More 

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